How, exactly, do Apple's iPhone sales 'disappoint'?

April 10, 2013: 1:35 PM ET

A Reuters headline has some Apple watchers scratching their heads.

Screen Shot 2013-04-10 at 1.17.54 PM

Reuters headline.

FORTUNE -- A Taipei-datelined Reuters story getting widely picked up Wednesday uses "disappointing" twice in six paragraphs to describe sales of Apple's (AAPL) iPhone.

  • "Disappointing demand" for the iPhone between January and March is blamed for the 19% drop in the first-quarter revenue of Hon Hai, which assembles iPhones in its Foxconn factories.
  • "Disappointing holiday sales" in the previous quarter are said to have "reinforced fears [that Apple] is losing its dominance in smartphones."

Two points.

First, the consensus among the 33 Wall Street analysts we polled in advance of Apple's Q1 2013 earnings call was that the company would sell a record 47.6 million iPhones in the holiday quarter. Apple sold 47.8 million.

Since when is beating the Street's consensus a disappointment?

Second, Hon Hai assembles a lot of devices for a lot of companies, including Dell (DELL) and HP (HPQ), whose PC sales haven't been doing so great. We have only the word one analyst -- KGI Securities's Ming-chi Kuo -- that the shortfall in Hon Hai's Q1 revenue was caused by the iPhone. We haven't seen any statement to that effect from Hon Hai. Even Chinese news sites are quoting the Reuters report.

It's possible that Reuters has put its finger on a real problem for Apple. We'll find out in two weeks when the company reports its quarterly earnings. But it sounds more like the echo chamber of conventional wisdom, in which anything Apple does these days is described as a disappointment.

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About This Author
Philip Elmer-Dewitt
Philip Elmer-DeWitt
Editor, Apple 2.0, Fortune

Philip Elmer-DeWitt has been following Apple since 1982, first for Time Magazine, and now on the Web for Fortune.com.

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